ACA and ICD-10 spell trouble for claims paying operations

A recent Enkata survey found that while many health care payers are unconcerned about potential impacts of the Affordable Care Act (ACA) and ICD-10, their complacency could be ill-founded. Our survey found that a primary concern of claims payers is meeting the Service Level Agreements they have with service providers. However, while 53% of payers expect claims volumes to rise substantially in the next two years, only 26% expect to improve their auto-adjudication rates. Meanwhile, 80% of payers don’t expect to increase the headcount of claims processors. Obviously, something has to give for payers to meet their SLAs without hiring or improving automation.

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The situation is further complicated by the lack of visibility into how the ACA and ICD-10 will impact claims paying operations. ICD- 10 may come and go without a hitch. However, if it has even a modest impact on auto-adjudication rates, the claims paying operation could be overwhelmed. Likewise, if the ACA brings a large volume of previously uninsured consumers who need health services, the initial result could be a significant spike in claims.

Fortunately, companies are taking some steps to address these changes. In fact, of the companies participating in exchanges, 89% were making some internal adjustments. Additionally, 86% of all payers reported making changes to prepare for ICD-10. When asked what kinds of changes were being made, virtually all of the companies said they were looking at technology investments and process improvements to deliver the required efficiency improvements.

Is it realistic to expect process and technology improvements to deliver the needed gains? With few companies reporting expected improvements in auto-adjudication, most payers must be looking to manual claims processing to get required efficiencies.

Can Manual Claims Processing Handle The Load?Performance data from Enkata indicates that there is the potential for improvements of up to 20% or even more in some organizations using technology. Error rates could also be reduced by 10% or more. In looking at performance gaps between the leaders and average performers, we have found that the quantity of completed work could be increased by 10% to 15% though simple interventions and better technological management tools. This would free up resources currently used to correct errors and recover overpayments.

Unfortunately, it won’t be easy to achieve these gains. Most of the easy and obvious fixes have already been put in place. Using the same approach, it’s unlikely payers will find additional performance gains. That said, where we have studied employee performance, we’ve found there are often simple steps that can improve performance.